AUGUST 9, 1999

A little more speculation

BACK in March we suggested that the TAG McLaren empire might be sold to DaimlerChrysler and that the money raised from that sale would then be used to buy the Ojjeh Family and Ron Dennis into Bernie Ecclestone's Formula One Holdings. At the time the story was largely speculation but since then the German car giant has bought 40% of the TAG McLaren Group and there are hints from DaimlerChrysler headquarters that this is just the first part of a phased takeover bid, timed to coincide with the launch of the Mercedes McLaren SLR supercar in 2003. The intention is for this machine to carve a place in Ferrari's market, using the McLaren brandname to promote sales.

There is no doubt that DaimlerChrysler does want McLaren to be a subsidiary. DaimlerChrysler co-chairman Jurgen Schrempp told German reporters as much recently although he did not indicate any timescale for such a move. The extreme secrecy surrounding the deal is curious as there is no obvious reason to hide anything, unless there is more to it than meets the eye.

We believe that this is the case and that eventually McLaren will become a DaimlerChrysler subsidiary - just as has happened with AMG. But will Dennis and the Ojjehs buy into Formula One Holdings?

There is no question that the Formula 1 business very much fits the policy of investment used by TAG, which specializes in high profile, high technology activities and then builds them up before floating or selling them. The company did this with TAG Heuer and seems to be doing the same with TAG McLaren. Ron Dennis's desire to see the sport run properly in the future is evidence enough that he would like to do the job and there is no doubt at all that a great deal more money could be made from F1 than is currently the case because Bernie Ecclestone has not bothered to exploit the potential that exists. He has made considerable progress in television technology but there is certainly more to come and there are enormous marketing possibilities in and around the sport.

It is worth noting that since January Dennis has been a member of the Permanent Bureau of the Formula 1 Commission. This body used to consist of just three members: Bernie Ecclestone, Max Mosley and Ferrari's Jean Todt. It exists to make quick decisions between F1 Commission meetings. This change was not publicized at all.